House prices could fall 30%
David Blanchflower, a senior Bank of England official, predicted that house prices could fall up to 30% if interest rates were not cut. He estimates that British houses could fall by a third unless interest rates are cut fast. Blanchflower said urgent action needs to be taken to keep Britain from following the U.S. into a what he saw as a recession.
“We need to take action to loosen policy sooner rather than later,” Blanchflower said. “I do feel that the slower rates fall, the further they will eventually have to go down to boost the economy.”
He went on to say that he was not sure that such a drop will definitely occur but there are possibilities. Estate agents polled by Hometrack said that prices are 0.9 per cent lower than a year ago. The worst affected areas are in Wales, West Midlands and even Greater London.